The banking sector was deemed first on the list of capital import receiving sectors, receiving around 42% of all capital inflows into the country in the second quarter (Q2) of 2022.
Information from the latest Central Bank of Nigeria (CBN) data set on capital imports shows that the manufacturing, finance and telecom sectors also received 15%, 13% and 10% respectively. global inflow of capital.
Meanwhile, the value of total capital imported into the country in Q2 22 edged down -2% q/q to $1.5 billion. However, on an annual (y/y) basis, it increased by 75%.
The data was compiled by the CBN, using bank transaction information from all registered financial institutions in Nigeria.
According to the Central Bank, the data are gross and not corrected for capital exports.
Despite the year-on-year increase, the value of capital imported into the country has not recovered to pre-COVID-19 pandemic levels, he said.
To put this into context, the $1.5 billion in capital imported into the country in Q2’22 pales in comparison to the average quarterly execution rate of $5.1 billion for the eighth quarters leading up to Q1′ 20 which marked the start of the pandemic, the CBN noted.
Portfolio investment, which fell -21% q/q (+37% y/y) to $757m, accounted for 49% of total capital imports. These were primarily investments in money market funds and bonds valued at $423 million and $322 million, respectively.
According to CBN data, portfolio investment in equities was a paltry $12.7 million, largely due to offshore investor apathy towards Nigerian equities following FX liquidity constraints (FX ) and difficulties in repatriating funds out of Nigeria.
Other investment inflows rose about 37% q/q to $631m and were the second largest component of capital imports. Its growth was mainly driven by loans of $596 million.
The balance of $147 million came from foreign direct investment (FDI) inflows, of which about $142 million were FDI inflows into equity investments.
Only three states and the Federal Capital Territory (FCT) were successful in attracting capital during the quarter. Lagos State attracted about 69% of the total. Abuja also held a 30% share. The small balance was split between Anambra, Kogi and Imo states.
The United Kingdom was the main source of capital in the country with 781 million dollars. Singapore and South Africa were next with $139 million and $122 million, respectively.
Given the pace of monetary tightening by the world’s major central banks and domestic foreign exchange challenges, analysts do not expect a significant increase in capital imports in the near term.
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